Refinance Demand Up as Mortgage Interest Rates Maintain Low Levels

By: Rosemary Rugnetta | September 2, 2010 at 11:56 am

September 2, 2010 – As mortgage interest rates continue to maintain low levels, refinance demand continues to increase across the nation. According to the Mortgage Banker’s Association, refinances have reached a 15 month high, the highest point since May of 2009. Rates are at the lowest point than any other time since Freddie Mac began keeping track in 1971. Mortgage applications rose for the fourth straight week with refinances accounting for the bulk of the demand. This is due to mortgage interest rates that continue to remain low with the 30 year fixed rate at 4.125% and the 15 years fixed rate at 3.625%.

The current refinance demand is not surprising considering the record low mortgage rates that have continued for the past several weeks. After a slow start, these low mortgage rates are finally spurring home owner interest. Unfortunately, not all home owners can refinance with these historic rates. Those who are underwater due to the depressed housing market and those whose credit has been compromised will not be able to take advantage of the market’s record low interest rates. On the other hand, for others, especially those who have refinanced within the past two years, it is a great time to do it again. In addition, those home owners who currently have adjustable rate mortgages that are about to reset, could benefit from refinancing at this time into a fixed rate mortgage.

The demand for refinances, which has continued to increase each week, could also be a positive sign for the weak economy. The current low mortgage interest rates have made it possible for home owners to refinance into a better interest rate loan or a shorter length loan. Many with higher interest 30 year loans are finding that, at today’s rates, it is in their best interest to refinance into a 15 year mortgage which is, in many circumstances, cheaper. By putting extra cash in consumers hands, they are able to pay off outstanding debts, money can be saved or just put back into the economy through spending. Although it is not certain if this refinance boom will do anything to stimulate the economy, this just might be the boost that the sluggish economy is in need of.

It is anyone’s guess at which way mortgage rates will go from here. If mortgage interest rates maintain these low levels or drop even lower, refinance demand should go up with more home owners deciding to refinance during the fall months just in time for the Holiday season. In the meantime, home owners probably should not wait for rates to go much lower since anything can happen with such a volatile market.

Mortgage Rates Don’t Affect Loan Applications as much as you’d Think

By: Vanessa Rodriguez | September 2, 2010 at 11:39 am

September 2, 2010 – Mortgage rates are back to their all-time record low of 4.00 percent with a standard 0.7 to 1.0 point origination for a 30-year fixed rate mortgage and 3.625 percent with similar origination for a 15-year fixed rate mortgage. Last week rates were a tad higher, but the mortgage market didn’t experience a noticeable dip in loan applications. In fact, loan applications increased 2.7 percent for the week ending August 27, 2010. The increase was primarily fueled by generous government programs and the recent refinance boom. Mortgage rates do not affect loan applications as much as borrowers, banks, and bureaucrats would hope.

Regardless of enticing rates, borrowers must qualify to purchase a home. Qualifications involve stellar credit history, high credit score, upfront cash for a down payment, and steady employment. A lender takes into account the borrower’s credit history, which should contain less than two 30-day late payments, and overall credit score, which should be 620 or better. Any bankruptcies should be at least two years old, provided the home borrower has had perfect credit since the bankruptcy discharge, and any foreclosures must be at least three years old with perfect credit since. Most lenders require at least 10 percent down payment. FHA-insured loans could qualify borrowers for 3.5 percent down, however other aspects of the loan application must greatly exceed minimum requirements and the borrower must pay additional fees, such as mortgage insurance. Borrowers must also have a strong employment history of a minimum of two years, preferably with the same employer, and income has remained constant or increased during those two years.

Although some uber optimistic market analysts claim a strong job rebound, particularly in the medical and energy fields, not many Americans are feeling it and for good reason, too. Chicago’s Federal Reserve Bank President, Charles Evans, announced yesterday that unemployment is currently at 9.5 percent nationwide and, “is likely to remain uncomfortably high for the foreseeable future.” As the housing market downturn approaches its three year anniversary, new home construction is less than a quarter of its boom peak and housing prices have drastically dropped nationwide. A majority of the job loss is concentrated in the housing and mortgage market, which affects construction workers, plumbers, carpenters, roofers, painters, handymen, and a plethora of real estate specific jobs, such as brokers, agents, appraisers, inspectors, and escrow companies. These individuals are not likely to transition into health care or energy, at least not without great difficulty.

Increasing unemployment obviously strains the number of loan applications submitted because borrowers cannot afford a mortgage payment without a steady income. Statistics on home purchases proves it. Home purchases fell 12 percent in June. In July, purchases more than doubled the previous month by plunging 27 percent. This is reportedly the weakest data collected since 1963 when the U.S. Commerce Department began collecting data. Moreover, between late April and early July, loan applications fell 43 percent. Vice President, Michael Fratantoni, at the Mortgage Bankers Association concludes that the combined data shows that a market rebound is highly unlikely anytime soon.

The stark decline in mortgage applications in late April is primarily due to the expiration of the federal homebuyer tax credit. Similar results are expected as other government programs fade out. For example, President Obama’s mortgage-relief program, Making Home Affordable, has a dropout of almost 50 percent. The historic average of all modified mortgages that revert into delinquency is 40 to 60 percent. The U.S. Department of Housing and Urban Development (HUD) just announced that it is expanding its refinance program, which will go into effect September 7, 2010 through June 10, 2011. The new program will allow underwater non-FHA borrowers to refinance into an FHA loan. But, Dean Baker, the co-director of the Center of Economic and Policy Research in Washington DC, observes that many beneficiaries of government programs will lose their homes and the federal funds that helped plant them there will benefit the banks. Any positive results directly attributed to government incentives and programs are short-lived, and many are just waiting for the bottom of the market to fall out.

Mortgage rates could graze even lower levels and still not significantly affect loan applications. The facts remain that borrowers must qualify for a loan, which is difficult with rising unemployment; banks have very strict guidelines for borrowers; and government programs only band-aid an expanding hematoma.

Mortgage Rates 9/1: Current Mortgage Rates Wobbly, Back Down

By: Ed Ferrara | September 1, 2010 at 2:17 pm

September 1, 2010  – Current mortgage rates are wobbly and dropped an 1/8 today. 30-year fixed mortgage rates are back to 4%, a record low, for borrowers paying a standard .07 to 1 point origination. 15-year fixed mortgage rates today are at 3.625%, also a record low.

FHA mortgage rates are still similar to conforming mortgage interest rates and the FHA 30-year fixed loan rate today is 4%, identical to today’s conforming 30-year fixed mortgage rate. FHA mortgages come with higher fees than conforming mortgages, in particular because of MI, charged as 2.25% of the loan amount at closing, though there’s also other FHA fees.

Jumbo mortgage rates are steady with the jumbo 30-year fixed loan rate today at 5.125%.

Wells Fargo mortgage rates today are unchanged. Wells Fargo’s 30-year fixed interest rate today is 4.375% with an APR of 4.559 as advertised on Wells Fargo’s website.

Mortgage Rates 8/31: Current Mortgage Interest Rates Firm Up

By: Ed Ferrara | August 31, 2010 at 3:21 pm

August 31, 2010  – Mortgage interest rates firmed up today thanks to gains in mortgage-backed securities prices. MBS prices, which drive mortgage rates in the opposite direction were up +9/32 (FNMA 30-yr 4.0 at 103.17).

Current 30-year fixed mortgage rates remain at 4.125% for well-qualified borrowers paying about 1 point origination. Today’s 15-year fixed mortgage interest rate remains at 3.625%.

Today’s FHA mortgage rates maintained levels similar to current conforming interest rates.

Jumbo mortgage rates are holding at record lows. Today’s jumbo 30-year fixed loan rate is 5.125%

Wells Fargo recently lowered their advertised 30-year fixed-rate to 4.375% with an APR of 4.559%.

Mortgage Rates Not Moving Housing Market

By: Rosemary Rugnetta | August 31, 2010 at 2:39 pm

August 31, 2010  – Mortgage rates have continued to remain low throughout the summer months. With the 30 year fixed rate at 4.125% and the 15 year fixed rate at 3.625%, one would expect that potential home borrowers would be waiting in line at banks to secure their mortgage. This is not the case today as mortgage rates are not moving the housing market in the direction that it should be going under normal circumstances.

There are several factors that can be blamed for the continued depressed housing market. Without knowing which way housing prices will go, buyers are not looking at purchasing a home as a way to make money and to secure their financial future. As housing prices continue to fall, it will take many years before a buyer will see any equity in their home. Many buyers are still waiting to see if housing prices continue to drop at which point there may only be foreclosures and short sales available.

Mortgage Rates Not Moving Housing Market

Some buyers do not want to deal with the problems with purchasing a foreclosure or a short sale. The time and paperwork involved for these homes is stressful and only the beginning of a long journey. The cost associated with potential repairs and maintenance involved with foreclosures is another drawback. Because of this, buyers, who have the upper hand in this market, are looking to purchase homes currently owned and occupied by sellers at the same prices as those offered for foreclosures and short sales. Sellers, on the other hand, are not willing to reduce their prices to those levels. By doing that, many sellers would have to bring cash to the closing table which many are unwilling or not in the financial position to do. With millions of homes in negative equity, sellers are sitting tight on their homes instead of taking a devastating financial hit.
When employment is high and jobs are plenty, people tend to move around more often seeking that better position. With the overall unemployment rate in the country high, people are not looking to change jobs and relocate. As many areas of the country continue to have a stubborn unemployment rate, many people are worried about the security of their own jobs which is keeping them from purchasing a home. Those who already own homes are staying put and waiting for the market to change for the better. There is just not enough consumer confidence in the job market or the economic recovery to boost the slumping housing market no matter how low mortgage rates drop.

With existing home sales the worst that has been seen in 15 years but refinancing on the increase, it is evident that consumers are more interested today in reducing their current debt. Many are beginning to live within their means and saving money instead. The enticement of lower mortgage rates may not move the housing market until jobs are created and consumers begin to have confidence in the economic outlook.

Mortgage Rates 8/28: Current Mortgage Interest Rates Up Slightly Friday

By: Ed Ferrara | August 29, 2010 at 9:31 am

August 28, 2010  – Current 30-year fixed mortgage interest rates were up slightly Friday, off record lows, and at 4.125% for well-qualified borrowers who pay 1 point origination. 15-year fixed mortgage rates were also up a tad and at 3.625%.

Current 30-year fixed FHA loan rates, which are driven by the same bonds as conforming mortgage interest rates, are also up an 1/8 to 4.125%. Despite FHA mortgage rates being very similar to conforming loan rates, closing costs and APR are higher because of MI and other FHA fees charged only on FHA loans.

Current jumbo mortgage rates are also up a tad and today’s jumbo 30-year fixed loan rate is 5.125%.

Current Wells Fargo mortgage rates are unchanged. Today’s Wells Fargo 30-year fixed interest rate is down 1/8 from last week and at 4.375% with an APR of 4.559 according to their website.

A gloomy outlook for the global economy has continued to hurt stocks, helping mortgage-backed securities prices, which drive mortgage rates in the opposite direction.

Mortgage Rates 8/26: Current Mortgage Rates at Standstill

By: Ed Ferrara | August 26, 2010 at 1:02 pm

August 26, 2010  – Current mortgage rates are at a standstill thanks to wavering mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction and are up +5/32 today.

Current 30-year fixed mortgage rates remain at 4% and 15-year fixed mortgage rates today are at 3.5% for well-qualified consumers with a 20% down payment paying 1 point origination, considered standard. These interest rates are verified by FreeRateUpdate.com research of over 2 dozen wholesale lenders’ mortgage interest rate sheets.

Today’s FHA mortgage rates are unchanged matching conforming mortgage interest rates. Today’s FHA 30-year fixed loan rate is 4%; however, MI and other FHA fees make closing costs on an FHA loan at 4% higher than that of a conforming mortgage with the same note rate and origination fee.

Jumbo mortgage rates today are also unchanged. Today’s jumbo 30-year fixed loan rate is 5%.

Jumbo mortgage rates, conforming mortgage interest rates, and FHA loan rates are all at all time record lows.

To display current mortgage rates on your website or blog use our mortgage rates widget, which is free.

Borrowers Lowering Mortgage Interest Rates Via “Cash In” Refinance

By: Rosemary Rugnetta | August 25, 2010 at 8:41 am

August 25, 2010  – In recent weeks, mortgage rates have hit a record low with the current 30 year fixed rate at 4.00% and the 15 year fixed rate at 3.50%. With many borrowers making the move to take advantage of these rates, the decision of how much to refinance has changed from the days of the housing boom when everyone was taking cash out of their homes. Today, borrowers are lowering their mortgage interest rates via the cash in refinance.

A cash in refinance is when a borrower brings money to the closing and, therefore, puts money into the transaction. These funds brought to closing must be documented with bank statements from the account that the funds were taken from. Borrowers need to know that all other normal underwriting guidelines still apply to these transactions.

According to the government sponsored entity, Freddie Mac, 22% of refinances made during the second quarter of this year have been cash in refinances with cash out refinances as their lowest level since 1985. As savings accounts, money market accounts and certificates of deposit have interest rate returns at their lowest since the 1930s, borrowers are choosing to invest their money into the equity of their homes instead of banks. As compared to several years ago when consumers were spending, today’s consumers have become more conservative and are interested in paying down their debt.

With housing values declining, many borrowers cannot qualify for a refinance unless they have more equity in their homes. As the past housing boom slowly corrects itself, the value of housing has plummeted leaving many home owners underwater in their mortgages. With these mortgages, a cash in refinance is the only option to take advantage of the current low interest rates. For many borrowers, bringing enough cash to increase their home equity to 20% will result in a lower interest rate and also the elimination of monthly private mortgage insurance premium payments. Since PMI rates have also increased for those without pristine credit, having to pay PMI could potentially disqualify some borrowers. With 30% home equity, the interest rate can possibly be even lower. Today’s stricter underwriting standards support loan to value ratios that should be at least between 75% to 80% in order to get the best rates. The less the loan to value together with good credit scores equals the lowest possible interest rate.

Some borrowers are bringing cash in to the refinance in order to avoid a jumbo mortgage which carries a higher rate. With the current interest rates at 50 years lows, some are refinancing with the intent to stay in their home for the long term. By doing a cash in refinance and reducing principal, many are finding that they are able to take a shorter term mortgage in an effort to pay down their loan as quickly as possible and, thereby, reducing their debt burden sooner. This has made the 15 year refinance very popular in today’s market. Over time, not only is the term shorter, but the overall interest paid over the life of the loan is greatly reduced.

As time goes on, housing will boom and bust while trends will come and go. Today’s trend of the cash in refinance will stay around as long as interest rates are low, housing prices are low and money is tight. With so much uncertainty in the economy, borrowers will continue lowering their mortgage interest rates via the cash in refinance in order to eliminate their debt as quickly as possible.

Mortgage Rates 8/24: Current Mortgage Interest Rates Keep Improving

By: Ed Ferrara | August 24, 2010 at 1:56 pm

August 24, 2010  – Conventional fixed mortgage rates stabilized further today as mortgage-backed securities prices, which drive mortgage interest rates in the opposite direction, continue to improve, up +11/32 (FNMA 30-yr 4.0 at 102.30) on much weaker than expected housing data.

Current FHA mortgage rates are still about the same as conforming mortgage rates. An FHA mortgage with a note interest rate of 4% at 1 point origination, will have a much higher APR and closing fees than a conforming mortgage at the same interest rate and origination because of MI and other FHA fees charged exclusively on FHA loans.

Jumbo mortgage rates have been sinking steadily for months and today’s 30-year fixed jumbo loan rate is 5%.

Wells Fargo mortgage rates are unchanged with Wells Fargo’s 30-year fixed mortgage interest rate remaining at 4.5% with an APR of 4.686 according to their website.

FreeRateUpdate.com researches over 2 dozen wholesale lenders’ rate sheets daily to determine the most accurate mortgage rates available to consumers at a standard .07 to 1 point origination.

Mortgage Rates Spurring Refinance, but Some Banks are Underwriting Too Slow

By: Rosemary Rugnetta | August 20, 2010 at 9:05 am

August 20th 2010  – Applications for mortgage refinancing are beginning to pour into lenders as mortgage rates continue to be at record lows. With the current mortgage rates at 4.00% for a 30 year fixed, 3.50% for a 15 year fixed and 3.25% for a 5/1 ARM, home owners are now taking the plunge to refinance. Many have been just watching the market to see what was going to happen and are now making their move. Since rates have reached historical lows not seen since the 1950s, the refinance door has opened up for everyone. Even those who already enjoy low rate mortgages are eager to apply for a refinance. Mortgage rates may be spurring refinance, but some banks are underwriting too slow to get loans closed.

Consumers, no doubt, are becoming frustrated with the amount of time it is taking to close their refinancing deal. As mortgage guidelines have changed and have become more complicated than several years ago, the process has become longer. In the past, automatic underwriting systems told exactly what was necessary to approve a loan. As the rules have changed, processors and underwriters must thoroughly examine the financial history of an applicant. Every credit glitch, every dollar deposited, every bad check and every overdraft must be explained. Documentation that must be received and verified can take a very long time. Any issue found delays the refinance mortgage from closing within a reasonable amount of time.

The appraisal rules have also changed the way a refinance is processed. Lenders must now use a third party system called the appraisal management system. With fewer appraisers working within an assigned market area, completed appraisals have fallen behind. A final underwriting cannot be done without the appraisal. In some cases, the appraisal takes so long to receive, that the credit, income and assets all have to be re-verified before underwriting the loan. This alone can take several days or weeks to accomplish.

With the volume of refinances increasing, lenders do not have the staff to produce the usual work flow. The problem has overloaded the available staff with an abundance of mortgage applications to be processed. This same problem occurred during the housing boom when mortgage volume was at its last high. At that time, lenders were willing to hire more staff in order to close loans more quickly. With today’s fluctuating market and unpredictable rates, lenders are not so willing to take on more staff to eliminate the overflow. If they are hiring, processors and underwriters need to become familiar with the new mortgage guidelines. To add to the problem, there is a shortage of FHA certified underwriters due to the lack of FHA business during the housing boom.

Having mortgage rates come down is what everyone has been waiting for. With approvals based on tighter standards, the usual work flow is no longer there. What we have gotten used to as normal closing time is not the norm and may never return. Although low mortgage rates are spurring refinance and some banks are underwriting too slow, borrowers can be prepared by having their paperwork ready and their credit in order prior to filling out an application. With lots of extra patience and cooperation, the refinance will finally be approved.

Mortgage Rates 8/19: Current Mortgage Interest Rates Helped by Falling Stocks

By: Ed Ferrara | August 19, 2010 at 1:54 pm

August 19th 2010 – Weaker than expected jobs data helped to push investors away from stocks and toward bonds causing a 140 plus point drop in the Dow, helping mortgage-backed securities prices, which drive mortgage rates in the opposite direction, to rise +18/32 (FNMA 30-yr 4.0 at 102.30), and stabilizing mortgage interest rates at already all time record lows.

30-year fixed mortgage rates are at 4% for highly qualified borrows paying about 1 point origination. Current 15 year fixed mortgage rates are at 3.5. Rates are unchanged this week since improving last week.

30 year fixed FHA mortgage rates today are the same as current conforming interest rates.

Jumbo mortgage rates are unchanged today remaining at record lows. Today’s 30 year fixed jumbo loan rate remains at 5%.

Wells Fargo mortgage rates are unchanged. Wells Fargo is advertising a 30 year fixed loan rate of 4.5.

Mortgage Rates 8/18: Mortgage Rates Flat Today

By: Ed Ferrara | August 18, 2010 at 1:55 pm

August 18, 2010 – Mortgage-backed securities prices, which move mortgage interest rates in the opposite direction, were down just a tad today -4/32, not enough to move fixed mortgage rates. As a result, 30-year fixed conforming and FHA mortgage rates today remain at 4% for well-qualified consumers with a 20% down payment who pay a standard .07 to 1 point origination. Today’s 30-year fixed mortgage rates were verified by FreeRateUpdate.com research of wholesale lenders’ interest rate sheets.

Current jumbo 30-year fixed mortgage rates remain at 5%. Jumbo loan rates, just as conforming and FHA loan rates, are at an all time low.

Wells Fargo mortgage rates are unchanged. Today’s Wells Fargo 30-year fixed rate remains at 4.5% with an APR of 4.686.

To display current FHA, Jumbo, and conforming fixed mortgage rates on your website or blog, use our today’s mortgage rates widget.

How Low Can Mortgage Rates Go?

By: Vanessa Rodriguez | August 17, 2010 at 3:35 pm

August 17, 2010  – As the government seeks to revive the real estate market, mortgage interest rates continue to fall. Interest rates dipped this week to a new record low in over fifty years. As of this writing, the interest rate on 30 year fixed rate conforming loans is 4.00% and 5.00% on jumbo loans. Jumbo loans are mortgage loan amounts that exceed $417,000 for most of the continental U.S.

Historically, jumbo mortgage rates were higher than conforming loan rates due to their considerable riskiness. But, recent developments in the mortgage lending business have made jumbo mortgage loans more attractive to banks and borrowers.

In order to avoid a government take-over, banks are motivated to provide more options to borrowers by way of jumbo mortgages. President Barack Obama signed new financial reform legislation last month, the Dodd-Frank Act, which permits the Federal Deposit Insurance Corporation (FDIC) to dismantle any financial institutions deemed “systemically risky,” forces banks to increase capital reserves, and enforces these regulations via a new consumer financial protection bureau.

In comparison to non-conforming jumbo loans, FHA-insured loans cost more. The annual percentage rate of an FHA-insured loan is 5.178 percent, whereas the APR of a jumbo loan is 5.098 percent. This year the Federal Housing Administration has reduced allotted seller concessions, increased down payment requirements, and increased mortgage insurance premiums. The FHA is floundering about for liquid assets because an audit revealed that capital reserves dipped to 0.53 percent, which Congress has mandated cannot be less than 2 percent. The FHA Commissioner, David Stevens, reported that the FHA seeks to decrease its market share by making it more difficult to qualify for FHA loans.

Big banks, such as J.P. Morgan Chase, Citibank, and Wells Fargo, are capitalizing on these recent developments by expanding jumbo lending practices. Some banks offer jumbo loans for as low as 10% down, 65 percent LTV, and $10 million mortgages. Jumbo loans are less risky because default rates are relatively low as most banks require a credit score above 680.

Of seven major housing markets, Redfin Corp. reports that less than half of active listings in 2009 resulted in sales. But, the aggressive pursuit of jumbo mortgages loans has provided a much needed boost in the luxury housing market. Pending sales in the luxury housing market is the only pricing category that increased in the past month. According to National Association of Realtors spokesman, Walter Maloney, the sales volume for homes over $1 million is up more than 35 percent from this time last year and homes between $700,000 and $1 million is up by 29 percent over last year. Maloney attributes these increases to the recent affordability and availability of jumbo mortgage loans.

The government could feasible put a wrench into the positive movement of jumbo loans by way of the Dodd-Frank Act. Just released Monday, the Federal Reserve Board is proposing a revision of escrow account requirements for first-lien jumbo loans. In order to determine whether a lender ought to establish an escrow account for property taxes and insurance, an APR threshold of 1.5 percentage points is currently applied. The Fed will increase the APR limit to 2.5 percentage points.

Although it is tough to determine how low interest rates will go, it is reasonable to assume that a rate increase will hurt the housing market. As unemployment grazes double digits and Fannie and Freddie file for additional government bailouts, a double-dip in the housing market is not in the best interest of the current administration and definitely not beneficial for Americans.

Mortgage Rates 8/17: Today’s Mortgage Rates Could Elevate

By: Ed Ferrara | August 17, 2010 at 9:17 am

August 17, 2010  – Today’s mortgage rates could elevate. 30-year fixed mortgage rates could rise from a current record low-level of 4%, but only if mortgage-backed securities prices, which drive mortgage rates in the opposite direction, continue to fall. MBS prices are down -10/32 (FNMA 30-yr 4.0 at 102.16) today on rising stocks.

For now current 30 year fixed mortgage interest rates are at 4% for highly qualified borrowers paying a standard origination fee of .07 to 1 point. Current 15-year fixed mortgage rates are at 3.5, also an all time low.

FHA mortgage rates, which are driven by the same securities as conventional mortgage interest rates, continue to mirror conventional mortgage rates for the most part. Today’s 30-year fixed FHA loan rate is 4%. Costs ares higher on FHA insured mortgages than on conventional loans even at the same note rate and origination.

Jumbo mortgage rates, also at record lows, are steady. Today’s 30-year fixed jumbo loan rate is 5%.

Wells Fargo mortgage rates are unchanged according to their website. Wells Fargo’s 30-year fixed rate is advertised at 4.5% with an APR of 4.686.

Mortgage Rates 8/16: Current Mortgage Rates Set New Low

By: Ed Ferrara | August 16, 2010 at 2:15 pm

August 16, 2010 – Current mortgage rates are at yet another new record low.

Current 30-year fixed mortgage interest rates are at 4% for qualified consumers paying a point origination. Today’s 15-year fixed mortgage rate is 3.5. Both conforming fixed mortgage rates have been verified by FreeRateUpdate.com research of wholesale lenders’ rate sheets.

Today’s FHA mortgage rates continue to match conforming interest rates.

Current jumbo mortgage rates are at a new record low as well. Today’s jumbo 30-year fixed loan rate is 5%.

Wells Fargo is advertising a conforming 30-year fixed rate of 4.5.

Mortgage-backed securities prices, which drive current mortgage rates in the opposite direction, continue to perform well and are up +5/32 (FNMA 30-yr 4.0 at 102.26) today. As a result, mortgage rates are stable.

Better Deal: 30 or 15 Year Fixed Mortgage Rate?

As mortgage rates have hit record lows during the past few weeks, many people are beginning to look into the various options available to them. For those who are able to qualify, it is a great time to purchase a home or refinance an existing mortgage. With the 30 year fixed mortgage rate at 4.250% and the 15 year fixed mortgage rate at 3.750%, many are wondering which is the better deal: 30 or 15 year fixed mortgage rate?

Taking a look at the 15 year fixed mortgage rate which is lower than the 30 year fixed mortgage rate, the difference is usually only % to 1% . The actual savings comes from the shorter term and the amount of overall interest paid over the 15 years. The mortgage is paid in half the time with a large amount of interest saved during the life of the loan. Equity in the home also increases at a faster rate. On the other hand, when looking at the monthly payment of the 15 year fixed rate mortgage, the amount can be too much for the normal home owner to risk. In fact, many people who qualify for a 30 year fixed rate mortgage may not be able to qualify for a 15 year fixed rate mortgage. Although the interest rate is lower, the amortization of the loan makes each monthly payment higher since the term is shorter. While less interest is paid, there is a lower tax benefit at the end of each year. With standard deductions higher, many people are not even able to claim the mortgage interest tax deduction unless they have other items that warrant a 1040 long form income tax return. For those nearing retirement who are financially stable, having their home paid off makes the 15 year fixed rate mortgage more attractive. For those refinancing a 30 year fixed rate mortgage with an interest rate that is 2% or more higher than the current 15 year rate, the payment might actually be the same and, therefore, would be a good option. For example, a $100,000 15 years fixed rate mortgage at 3.750% calculates to a $727.22 monthly mortgage payment.

The 30 year fixed mortgage rate has always been the preferred loan. Even though the interest rate is higher, the fixed monthly payments are lower. Enough interest is usually paid each year so that the borrower is allowed the mortgage tax deduction on their income tax return. Financially, this can be a better option for borrowers. Home owners can make extra payments towards principal each month or as often as they wish. By doing so, the length of the loan will become shorter, equity in the home is built faster and less interest will be paid over the length of the loan. If for some reason, an extra principal payment cannot be made, the borrower just makes the regular payment that is due. It is the financial stability and available cash flow that attracts most people to the 30 year fixed rate mortgage. For the new home buyer, even if they can afford the 15 year fixed rate mortgage, the 30 year fixed rate mortgage is more practical because it will allow them to have available cash to perform upgrades or repairs. A $100,000 30 year fixed rate mortgage at 4.250% will warrant a monthly payment of $491.94 with the final payment in 2040. Making a $100 extra principal payment each month will cut 8 years off the life of the loan with a final payment due in 2032. Any time the extra payment cannot be made, there is flexibility as no penalty is attached to the borrower since it is completely optional.

There is no single or easy answer to determine the better deal: 30 or 15 year fixed mortgage rate. Each individual circumstance is unique and financial situations are different. When evaluating the differences, be conservative when calculating income and expect emergencies or other responsibilities to arise. Request a good faith estimate for each type of loan and compare the differences. Borrowers should choose the type of mortgage that they can realistically and comfortably pay off.

When Will Mortgage Rates Finally Rise?

With so many people sitting back and waiting to see what is going to happen in the housing and mortgage markets, it is now clear that the summer season is not turning out like it normally would. While summer is a time to move when children are out of school, this year’s season did very little to stimulate the market. With the current record low mortgage rates, everyone is trying to predict when mortgage rates will finally rise.

Earlier this year, the Feds had planned to pull back some of their emergency decisions that were made during the financial crisis. At that time, they were preparing to begin raising interest rates in the spring in order to keep the economy growing. During the first quarter of this year, mortgage rates dropped because mortgage loans could be packaged and sold to Fannie Mae and Freddie Mac who then sold them to the Feds. It was at that time that many people refinanced their mortgages not knowing if the lower mortgage rates would continue. With the global crisis continuing after March and into the spring season, mortgage rates continued to stay down to a reasonable level.

Now, fears over the possibility of a double dip recession has prompted the Feds to make their latest move. In an effort to support economic growth, the Feds have said that they will use the payments received from the Fannie Mae and Freddie Mac debts and mortgage backed securities to purchase long term U.S. Treasury securities. By buying long term government bonds, the Feds are trying to move interest rates on mortgages and corporate loans even lower in an effort to help the economy grow at a quicker pace. As yields on Fannie Mae and Freddie Mac mortgage securities guide the U.S. mortgage rates, it is a possibility that mortgage rates will go even lower with the goal of increasing bank lending.

Unfortunately, until the unemployment rate moves lower and consumer spending moves higher, the economy is destined to be at a standstill. While the financial system has money to lend, the standards have become so strict, banks are unable to find acceptable loans to close. Money is just not flowing the way that is necessary to spur the economy. Unemployment is keeping many people out of the mortgage arena while underwater home owners are finding it impossible to refinance.

For right now, anyone and everyone who can take advantage of the lower mortgage rates should do so while they are here. Given the latest Fed announcement and their continued involvement in trying to grow the economy, mortgage rates may continue to stay low. But as everyone knows, this can change overnight and no one will want to be caught sitting on the sidelines wondering when will mortgage rates finally rise. There is a great opportunity out there right now that may not be there in the near future.

Obstacles You May Face When Trying to Refinance to Today’s Low Mortgage Rates.

As we are all well aware by now, mortgage lending standards were lax during the housing boom. Now, many of the people who bought back then with little down payment and not-so-great credit and who have since lost their jobs or had to take a pay cut due to the financial crisis are behind on their payments or have had to foreclose on their homes. In response, mortgage lending standards have made a 180 degree turn. So, if you do not have stellar credit, a stable job, or the home equity required to refinance in today’s housing market, you probably won’t qualify.

The main obstacle you face is answering the question: Are you eligible to refinance? And, the answer unfortunately is not simple because the process used to determine your eligibility for refinancing is similar to the approval process used when you obtained your original mortgage. Your lender is going to consider your income, assets, debits, credit score, current value of your property and the amount you want to borrow. So, for example, if your credit score has improved, you may be able to get a loan at a lower rate. But, if your credit score has weakened, you could end up having to pay a higher interest rate and, in that case, won’t want to refinance.

Additionally, a lender will look at the amount of the loan you are requesting and the value of your home, as determined by an appraisal. The result of this evaluation is called LTV or loan-to-value ratio. If the LTV ratio does not fall within your lender’s guidelines (each lender has different guidelines, so it pays to shop around), you may again be offered a loan with less favorable terms than you already have.

Lenders want to know if you earn enough money to repay the loan. Housing costs should be 28% or less of your gross (pretax) income. Count all recurring expenses including principal and interest on your mortgage, property taxes, condo or association fees and insurance. If you are a two-income family, you can consider income from both jobs. You can also consider money made from part-time and seasonal work.

Currently about 38% of homeowners with a mortgage spend more than 30% of their income on housing. About 15% spend half of their income or more on housing. Many of them can’t make their payments, are defaulting on their loans or are already in foreclosure. Don’t become one of them.
Total monthly debt payments should be 36% or less of your income. Add up all your expenses: auto loans, student loans, credit card bills, child support, etc against your 401(k) plan. The more non-mortgage debt you have, the less you can afford to spend on a home.

The housing bust dropped home values and depleted home equity for at least 25% of the American homeowner population. Even if you have good credit and a solid job, you may be rejected when you try to refinance because your home is worth less than what you owe on your mortgage. If your loan has negative amortization, (when your monthly payment is less than the interest you owe, that unpaid interest is added to the amount you owe) it will difficult to refinance. If this is the case, you may actually owe more on your mortgage than what you originally borrowed.

Mortgage Rates 8/9: Record Low Mortgage Rates Still Available

Mortgage rates are still at record lows. Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, continue to waiver, rising Friday on weak unemployment data before dipping slightly this morning.

30-year fixed mortgage rates are at 4.25% for well-qualified borrowers with a 20% down payment who pay .07 to 1 point origination. 15-year fixed mortgage rates are at 3.75%. Both conforming fixed mortgage rates are record lows and verified as available by FreeRateUpdate.com through research of over 2 dozen wholesale lenders’ rate sheets for brokers.

Today’s FHA 30-year fixed loan rate is 4.25%, the same as today’s 30-year fixed conforming mortgage rate. The difference is in closing costs. FHA loans typically have higher closing fees than conforming mortgages because of MI and other FHA fees. FHA still offers the smallest down payment on the market of just 3.5% making FHA loans most popular with those buying a home.

Jumbo mortgage rates are holding at their record low. Today’s 30-year fixed jumbo loan rate is 5.125%.

Wells Fargo, the nations number one mortgage originator by volume, is offering on their website a conforming 30-year fixed mortgage rate of 4.5% with an APR of 4.686.

To display today’s mortgage rates on your website or blog please use FreeRateUpdate.com’s current mortgage rates widget.